Spain could block Berkeley’s uranium project and its shares are sinking

HEAR IT FIRST WITH OUR DAILY NEWSLETTER

A besieged Berkeley Energia is struggling to respond to Spanish media reports that the Government will not authorise operational permits for the company’s flagship Salamanca uranium project near Madrid.

The article quoted an anonymous government source, who reportedly said “the government will wait for the ongoing proceedings to go through, but it will say no”.

A second source said Berkeley (ASX:BKY) was “living in a parallel universe” if it believed the mine would soon become a reality.

The news yesterday sent Berkeley’s share price spiralling from 47c to 33c.

Berkeley contacted both the Nuclear Safety Council and the Energy and Environment Ministry seeking immediate clarification of these reports and will make an announcement as soon as a response was received.

“The company also notes that Spain’s Nuclear Safety Council and Energy and Environment Ministry have both declined to comment on the article,” Berkeley told investors.

“The company has received no official notice in this regard from the Nuclear Safety Council nor any other government department to date.”

The Berkeley Energia (ASX:BKY) share price, fading since late September, plummeted to 32c on the speculation.

Berkeley has reportedly spent over $113 million over the last decade to get the open pit mine up and running.

Estimated construction costs are $404 million.

In its quarterly report, two days earlier, the company highlighted the “strong and growing local support” for the divisive Salamanca project, as well as the potential economic benefits for a region “suffering some of the highest youth unemployment within the European Union”.

“We are firmly committed to developing the mine, however continued investment is dependent on the company receiving the necessary approvals for the commencement of construction,” boss Paul Atherley said.

“We are working closely with the relevant authorities and are confident that with due process these approvals will be forthcoming however, in the meantime, we are taking the necessary steps to reduce costs.”

Salamanca was going to be a top 10 producer of uranium once fully operational, selling 4.4 million pounds into the global market.

If the mine isn’t approved, it will at take future production out of an already very tight uranium market, which is sent prices up this year.

Berkeley – which is an explorer, and not making any money from its operations – held cash and cash equivalents of $111 million at the end of September.